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Monthly roundup - August 2011

Staying on top of developments

Author: Deepesh Malik and Debbie Hankey, Accounting Technical Group

August 2011 edition
Issued 05 September 2011

In this edition:

Monthly highlights

IASB proposes consolidation exemption for ‘Investment Entities’

The International Accounting Standards Board (IASB) has issued Exposure Draft ED/2011/4 Investment Entities which proposes exempting ‘investment entities’ from the consolidation accounting requirements of IFRS 10 Consolidated Financial Statements. Investment entities would be required to measure their investments (including those in associates and joint ventures) at fair value through profit and loss in accordance with IFRS 9 Financial Instruments and to provide additional disclosures to enable users of its financial statements to evaluate the nature and financial effects of its investment activities.

An investment entity is defined in the exposure draft as an entity that meets all of the following criteria:

  • The entity's only substantive activities are investing in multiple investments for capital appreciation, investment income (such as dividends or interest), or both
  • The entity makes an explicit commitment to its investors that the purpose of the entity is investing to earn capital appreciation, investment income or both
  • Ownership in the entity is represented by units of investments, such as shares or partnership interests, to which proportionate shares of net assets are attributed
  • The funds of the entity's investors are pooled so that the investors can benefit from professional investment management. The entity has investors that are unrelated to the parent (if any), and in aggregate hold a significant ownership interest in the entity
  • Substantially all of the investments of the entity are managed, and their performance is evaluated, on a fair value basis
  • The entity provides financial information about its investment activities to its investors. The entity can be, but does not need to be, a legal entity.

The proposals do not to permit a parent of an investment entity to retain fair value accounting applied by its subsidiary, unless the parent itself qualifies as an investment entity, i.e. the parent would consolidate all entities in the group.

Although the exposure draft does not indicate an application date it is likely to be aligned with that of IFRS 10 being financial periods beginning on or after 1 January 2013. The AASB has yet to issue an equivalent exposure draft but will do so in due course.

AASB released the suite of six standards

The AASB has issued a suite of six related standards: AASB 10Consolidated Financial Statements’, AASB 11 'Joint Arrangements', AASB 12 'Disclosure of Interests in Other Entities', AASB 127 'Separate Financial Statements' (2011), AASB 128 'Investments in Associates and Joint Ventures' (2011), and AASB 2011-7Amendments to Australian Accounting Standards arising from the Consolidation and Joint Arrangements Standards’, that aim to improve the accounting requirements for consolidated financial statements, joint arrangements and off balance sheet activities. These standards are applicable from 1 January 2013, with early adoption allowed by for-profit entities.

These standards incorporate the recent IFRSs issued by the IASB. Please refer our earlier edition May 2011 Monthly Roundup for a detailed discussion and links to relevant newsletters and podcasts on these changes.


New pronouncements

(A listing of new accounting standards, interpretations, exposure drafts, discussion papers and similar documents issued during the month by the AASB and IASB/IFRIC, along with other IFRS-related documents by other bodies that may be of interest and related links to Deloitte publications and alerts. See also our What’s new in the June 2011 financial reporting cycle summary.)

Australian Accounting Standards Board (AASB)
Pronouncement Key dates More information

AASB 10 ‘Consolidated Financial Statements’, AASB 11 'Joint Arrangements', AASB 12 'Disclosure of Interests in Other Entities', AASB 127 'Separate Financial Statements' (2011), AASB 128 'Investments in Associates and Joint Ventures' (2011), and AASB 2011-7 ‘Amendments to Australian Accounting Standards arising from the Consolidation and Joint Arrangements Standards

This suite of six related standards incorporates the recent IFRSs issued by the IASB, which aim to improve the accounting requirements for consolidated financial statements, joint arrangements and off balance sheet activities.

Applicable from 1 January 2013, with early adoption allowed by for-profit entities

AASB press release

May 2011 Monthly Round up (for links to newsletters, podcasts etc)

ED 214 Extending Related Party Disclosures to the Not-for-Profit Public Sector

Proposes the requirements in AASB 124 Related Party Disclosures to apply unamended to NFP public sector entities.

Accordingly, certain transactions between government-related entities of the same jurisdiction would not be required to be disclosed in detail, and other related party transactions, such as Ministerial transactions, would only be disclosed if material.

Comments due by 31 January 2012

Proposed effective date 1 July 2013

ED 214 (PDF 293kb)

ED 215 Mandatory Effective Date of IFRS 9

Incorporates IASB ED/2011/3; proposes amendments to AASB 9 Financial Instruments, issued in December 2009 and December 2010, to push back the mandatory effective date of AASB 9 Financial Instruments from 1 January 2013 to 1 January 2015.

Comments due to the AASB by 7 October 2011 and to the IASB by 21 October 2011 ED 215 (PDF 295kb)

ITC 25 Request for Comment on IASB Request for Views on Agenda Consultation 2011

Aim of the agenda consultation is to gather views, from all those interested in financial reporting, on the strategic direction and overall balance of the IASB work plan, as well as on the priority of individual projects or agenda areas over the next three years.

Comments due to the AASB by 10 November 2011 ITC 25 (PDF 436kb)

International Accounting Standards Board (IASB)
Pronouncement Key dates More information

Exposure Draft ED/2011/3 Mandatory Effective Date of IFRS 9 (proposed amendment to IFRS 9 (November 2009) and IFRS 9 (October 2010))

Proposes to push back the mandatory effective date of IFRS 9 Financial Instruments from 1 January 2013 to 1 January 2015.

The Board seeks to align the effective dates for all phases of the project (both completed and ongoing). The proposed deferral would only change the date when IFRS 9 would be mandatory. Entities could still elect to use IFRS 9 before 2015.

Comments due by 21 October 2011

ED/2011/3 (PDF 126kb)

IFRS 9 Financial Instruments Status Update (PDF 748kb)

IFRS in Focus newsletter (PDF 69kb)

Exposure Draft ED/2011/4 Investment Entities*

Proposes to define 'investment entities' as a separate type of entity that would be exempt from the consolidation accounting requirements in IFRS 10 Consolidated Financial Statements.

Instead, the investment entity would be required to measure those investments at fair value, with changes in fair value recognised in profit or loss.

Comments due by 5 January 2012

ED/2011/4 (PDF 341kb)

IAS Plus article

* Equivalent pronouncement not yet issued by the AASB

Standard setter meetings

(A listing of meetings of various standard setters during the month or where documents were issued during the month in respect of the previous month’s meetings, with links to our analysis, agenda papers and so on)

Meeting Highlights More information

No main AASB or IASB meetings were held in August 2011.

Upcoming IFRS Interpretations Committee (IFRIC) meeting is scheduled to be held on 8 and 9 September 2011 (IAS Plus article )

 

New Deloitte publications

(Key IFRS-related and other publications issued by Deloitte during the month, not covered elsewhere. You can find full details and back issues of our various publications by following these links: Accounting alerts, IAS Plus publications, IFRS in Focus Newsletters, Webcasts, and Podcasts)

IFRS publications
Other publications of interest
Deloitte comment letters
  • Deloitte Comment Letter (PDF 29kb) on IAS 27 Consolidated and Separate Financial Statements - Group reorganisations in separate financial statements
  • Deloitte Comment Letter (PDF 23kb) on IFRS 3 Business Combinations - Acquirer in a reverse acquisition
  • Deloitte Comment Letter (PDF 23kb) on IFRS 3 Business combinations involving newly formed entities: business combinations under common control
  • Deloitte Comment Letter (PDF 26kb) on IFRS 3 Business combinations involving newly formed entities: factors affecting identification of the acquirer
  • Deloitte Comment Letter (PDF 104kb) to the European Financial Reporting Advisory Group (EFRAG) on its Discussion Paper Considering the Effects of Accounting Standards
  • Deloitte Comment Letter (PDF 321kb) to the US Securities and Exchange Commission (SEC) on its views of the SEC staff paper, Work Plan for the Consideration of Incorporating International Financial Reporting Standards Into the Financial Reporting System for U.S. Issuers — Exploring a Possible Method of Incorporation
Deloitte Webcasts and Podcasts
  • IFRS: Important Developments (link to external site, registration required) discusses the standard-setting developments at the International Accounting Standards Board (IASB)
  • Stay Tuned Online – IFRS and UK GAAP update
  • Upcoming Dbriefs webcasts: Sustainability Reporting Update: One Big Global Family? (7 September 2011) and Leases: A Comprehensive Update on the Joint Project (8 September 2011) (IAS Plus article)

Other developments

(A brief listing of other financial reporting developments during the month. A full summary of all IFRS-related developments can be found in our August historical summary on IAS Plus. You can also subscribe to our Deloitte IAS Plus RSS feed to be kept informed of developments as they happen)

Australian-specific topics
  • The Australian Accounting Standards Board (AASB) has launched a survey to seek user perspective on the initial accounting for intangible assets acquired in business combinations under IFRS 3 Business Combinations and IAS 38 Intangible Assets (IAS Plus article)
  • The AASB has submitted comments to the IFRS Interpretations Committee on two tentative agenda decisions relating to IFRS 3 Business Combinations – business combinations involving newly formed entities
  • The Australian Securities and Investments Commission (ASIC) has released as Information Sheet 144 Annual general meetings: Voting on the remuneration report resolution guidance on how companies should apply the new rules concerning the voting by chairmen of undirected proxies on remuneration reports at AGM’s
International Accounting Standards Board
  • The IASB has published a report (PDF 252kb) which presents an analysis of the effects of IFRS 11 Joint Arrangements (and related disclosures included in IFRS 12 Disclosure of Interests in Other Entities); including the IASB's expectations of how the IFRS will affect the accounting for current and new joint arrangements according to their structure and legal forms (IAS Plus article)
  • IFRS Foundation has updated IFRS XBRL Taxonomy for IAS 1 and IAS 19 amendments (IAS Plus article)
  • IASB's Investor Perspectives newsletter Benefits of the IASB’s recent revisions to pension accounting
  • IASB's Investor Perspectives newsletter The IASB needs input from investors and others on which projects it should undertake next
  • The IASB’s latest work plan has been released with a revised timetable for final standards
  • A near final draft of IFRIC Interpretation 20 Stripping Costs in the Production Phase of a Surface Mine has been posted to the IASB's website (IAS Plus article)
  • The Financial Accounting Standards Board (FASB) and European Financial Reporting Advisory Group (EFRAG) have formally agreed to work together on their respective projects to develop a disclosure framework, with a view to creating a consistent framework for both United States and international GAAP (IAS Plus article)
External webcasts and Podcasts
Other global news
  • The European Financial Reporting Advisory Group (EFRAG) plans to conduct field-testing of the revised IASB proposals on revenue recognition, which are expected to be published by the end of September 2011. The purpose of the field-testing is to identify potential implementation and application concerns, and to estimate the effort required to implement and apply the proposals (IAS plus article)
  • EFRAG has issued a report (PDF 121kb) regarding costs of implementing country-by-country reporting by multinational companies, with the main focus being the companies active in an extractive industry in third countries (IAS plus article)
  • The Organisation for Economic Co-operation and Development (OECD) has released a report highlighting the likely impacts of IAS 19 amendments (IAS plus article)
  • The American Institute of Certified Public Accountants (AICPA) has recommended optional adoption of IFRS by US public companies in its comment letter to the US Securities and Exchange Commission (SEC) (IAS plus article)
  • The European Securities and Markets Authority (ESMA) has published its eleventh batch of extracts from the enforcement decisions taken by EU national enforcers of financial information (IAS plus article)
  • Harvard Business School has released a draft working paper, The international politics of IFRS harmonization, that explores the international political dynamics of IFRS adoption (IAS plus article)

Related links

Related links

  • Monthly roundup - April 2014
    The International Accounting Standard (IASB) has published for public comment an Exposure Draft of proposed amendments to IAS 1 ‘Presentation of Financial Statements’ to address concerns on the existing disclosure requirements.
  • Monthly roundup - January 2014
    ASIC has extended Class Order [CO 13/1050] which allows issuers of stapled securities (stapled entities) to continue to present consolidated or combined financial statements
  • Monthly roundup - September 2011
    Financial reporting developments during September 2011. Monthly highlights discuss the developments in the field of Integrated Reporting and the release of new Standard on Fair Value and amended Standard on Employee Benefits by the AASB
  • Monthly roundup - November 2012
    Financial reporting developments during November 2012. Monthly highlights discuss the Deloitte resources for the December 2012 reporting period
  • Monthly roundup - October 2012
    Financial reporting developments during October 2012. Monthly highlights discuss the recently issued investment entity consolidation amendments by the IASB; and the developments in the IASB lease project
  • Monthly roundup - February 2009
  • Monthly roundup - April 2009
  • Monthly roundup - January 2011
    Financial reporting developments during January 2011. Monthly highlight provides a recap of accounting for natural disasters, ASIC's review program, recent amendments and financial instruments.
  • Monthly roundup - May 2010
    Summary of developments in financial reporting during May 2010. Monthly highlight discusses the financial reporting impacts of recent and proposed tax changes.
  • Monthly roundup - January 2010
    Summary of developments in financial reporting during January 2010. Monthly highlight discusses ASIC's release of the results of its review of June 2009 financial reports and its December focus areas.

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